Walnuts Update:

September 2014

Total Today the Objective Walnut crop report was released:

546,000 tons up 11% over 2013 (a record) . Details & complete report attached in PDF format.

**Info below is from attached PDF file, page 1 of 6**

RECORD WALNUT PRODUCTION FORECAST

The 2014 California walnut production is forecast at a record 545,000 tons, up 11 percent from 2013's production of 492,000 tons. This forecast is based on the 2014 Walnut Objective Measurement (O.M.) Survey, officially conducted by the National Agricultural Statistics Service August 1 through August 22, 2014. There were a few samples completed before August 1 for training and scheduling purposes.

Despite a lack of chilling hours and a drought that has hit California, the 2014 walnut crop is forecast at a record level. Growers used surface water where available and groundwater when necessary to provide adequate water supply to the trees. Weather conditions during the growing season were mild thus benefiting the crop. Crop quality is excellent with low disease and insect pressures. Overall, the 2014 crop is developing faster than last year and harvest is expected to start early.

The 2014 Walnut O.M. Survey utilized a total of 746 blocks with two sample trees per block. Survey data indicated an average nut set of 1,372 per tree, up 11 percent from 2013s record low average of 1,239. Percent of sound kernels in-shell was 98.7 percent Statewide. In-shell weight per nut was 21.2 grams, and the average in‑shell suture measurement was 32.5 millimeters. The in-shell cross-width measurement was 32.4 and the average length in-shell was 38.1 millimeters. All of the sizing measurements were above average levels.

Estimated nut sets, sizing measurements, average number of trees per acre, and estimated bearing acreage were used in the statistical models.

SURVEY HISTORY

The Walnut O.M. Survey began in 1958 to fulfill industry needs for an accurate walnut production forecast prior to harvest. The original sample was chosen proportionally to county and variety of bearing acreage. With each succeeding year, additions and deletions have been made in the sample to adjust for acreage removed, new bearing acreage, and operations that choose not to participate in the survey.

SAMPLING PROCEDURES

Once a block is randomly selected and permission is granted by the operation for enumerators to enter the block, two trees are randomly selected. An accessible branch is chosen, which is 5-15 percent of the total cross-sectional area of the primary limbs and reachable with a twelve-foot ladder. Measurements are made on the trunk, each primary, and each split leading to and including the accessible branch. The sample tree and accessible branch are marked by a single tag.

On the accessible branch, every first of five nuts is picked for use in size and grade determinations. If available, at least ten nuts are harvested from the accessible branch for this purpose.

The following measurements are made on nuts selected for sizing:

1. Weight of nut including hull
2. Width of shell at suture
3. Width of shell 90 degrees to suture line (cross-suture)
4. Length of shell
5. Kernel grade
6. Weight of nut in-shell

DATA RELIABILITY

The 80 percent confidence interval is from 501,000 tons to 589,000 tons.

July 2014

Total Domestic Walnut shipments in May 2014 came out at 27,809 short tons (55.61 million lbs), DOWN 9% from May 2013. Exports are DOWN 6.5% and Domestic market is DOWN 11% compared to May 2013.

Total September through May shipments remain the 2nd largest historical shipments after the 2010 Crop, with 432,592 short tons (865 million lbs), UP 1% compared to last season. Exports shipments reached a record 286,203 short tons (566 million lbs), UP 2%. Domestic market was slightly DOWN, following the same trend as in the past 5 years.

Breaking it down further for the individual Inshell and Shelled Shipments:

INSHELL

From September through May, Inshell shipments came out at 293,897 million lbs, representing the 2nd largest Inshell shipments after the 2012 Crop with a 3% drop compared to last year. Exports are DOWN 2% while Domestic shipments are DOWN 26%, the lowest level ever recorded.

SHELLED

The September through May period continues to reflect a slight increase for the Shelled Walnut Shipments, UP 3% compared to last year, with 253 million lbs. Export markets were UP 6%, while the Domestic market was UP 1%.

In summary, the crop receipts as of May 31st 2014 came out at 488,971 short tons.

Considering a Carry-In of 48,000 short tons into the 2013 Crop, the industry is now 80% shipped and likely close to 90% sold. Inventory in California has been extremely tight for weeks. Packers seem generally sold out of Inshell and Kernels alike, particularly for Light Halves or Light Halves & Pieces materials.

Specifically in regards to Shipments:

The EU market shows an impressive increase compared to last year, with a 47% increase on Inshell, spearheaded by Italy (35 million lbs; +40%), Spain (21 million lbs; +50%) and Germany (11 million lbs; +48%), and a 20% increase on Kernels the 2 main kernel importers being Germany (22 million lbs; +17%) and Spain (10 million lbs; +25%)

The Middle East evidences a strong increase as well with 45% more Inshell and 22% more Kernels than last year. For the Inshell shipments: over 52 million lbs were shipped to Turkey (a 34% increase) and over 11 million lbs were shipped to the U.A.E. market (a 75% increase). Except for a decrease in Egypt and a stable Jordan, all other reported Middle Eastern countries increased

The Asia market has been weaker this season evidencing so far a 28% drop on Inshell overall and a 4% drop on Kernels. The China/HK/Vietnam deliveries of Inshell dropped from 176 million lbs to 123 million lbs, a 30% drop. On Kernels, Korea passed Japan as the top kernel importer, at 19.4 million lbs (a 9% increase). Japan dropped slightly to 18.6 million lbs (a 4% decrease).

The Domestic market continues to see a decrease in Inshell (26% drop) and an increase in Kernels (1% increase) compared to the previous season.

In Current Crop, there continues to be some demand with very light trading, given the extremely tight availability in California.

New Crop trades have started in extremely limited quantities during the International Nut Congress in Melbourne, last month and at higher levels than where it started last year.

Trading volume remains light and offers are extremely limited. Buyers are hesitant to book at these higher levels while sellers are slow to offer due to concern on impact on their grower prices.

Up until now, there does not to appear to be any negative news being reported regarding most of the walnut crops from the US, Chinese, and Eastern European. Buyers and sellers alike are taking some time to digest the prices being discussed these days.

January 2007

Supplies are extremely tight with little or no Combination material appearing to be available. Further, due to the higher than normal ratio of halves to pieces being realized during shelling, pieces are selling at a premium (Piece prices have already climbed above the $3.00/lb mark). To satisfy their industrial ingredient customers, the industry will have to dice Light Halves to make pieces. The cost of doing so could force prices even higher. We await Industry shipment Numbers.

September 2005

Walnut production in California will set a record this year, according to the 2005 California Walnut Objective Measurement Survey Report. Farmers should harvest 340,000 tons of walnuts, a 5% increase from last year. More walnut trees have come into production this year and the average number of nuts per tree has risen slightly.

September 2004

The 2004 California Walnut production is forecast at 325,000 tons, down from 2003's record production of 326,000 tons.

This forecast is based on the 2004 Walnut Objective Measurement (O.M.) Survey, which was conducted July 26 through August 24, 2004.

December 2003

The Walnut Marketing Board has reported that California walnut production for
the 2003 crop is 324,077 tons. The Hartley crop came in at 63,290 tons, down
6.7 percent, but somewhat higher than the 60,000 ton estimate in the Objective
Measurement by the California Agricultural Statistics Service. We continue
to see growth in the newer higher yielding varieties, including Howard and
Chandler, as more orchards come into production.